03 OVERVIEW & METHODOLOGY
04 NOTABLE OBSERVATIONS
05 VALUATIONS & REVENUE MULTIPLES
08 LOOKING THROUGH THE DATA:
09 UNICORNS IN THE SOUTHEAST
10 SEEING AROUND CORNERS TABLE OF 12 OVERVIEW OF THE SOUTHEAST CONTENTS 13 TOP INDUSTRIES
14 INDIVIDUAL STATE DATA:
14 ALABAMA
15 FLORIDA
16 GEORGIA
17 KENTUCKY
18 MISSISSIPPI
19 NORTH CAROLINA
20 SOUTH CAROLINA
21 TENNESSEE
22 VIRGINIA
23 GOVERNMENT BACKED INVESTMENTS
24 NOTABLE EXITS OVERVIEW
In this second annual report, we have taken an in-depth look at startup activity throughout nine states in the southeastern United States over the five-and-a-half-year time period from January 1, 2013 through June 30, 2018. The purpose of The State of Startups℠ in the Southeast is to deliver a comprehensive overview of the venture capital and startup ecosystem in this region. We hope this report will inform key investors of emerging trends to watch as well as highlight the area’s growth and future opportunities, particularly in regard to understanding the valuation of southeastern companies and how that valuation impacts the potential for return on investment.
METHODOLOGY
To develop this year’s report, multiple data sources were compiled, including both primary and secondary research. We have spoken at length with people from multiple funds and service providers to the startup ecosystem and have learned a great deal about the region directly from the entrepreneurs that reside there. We have also utilized independent third- party data aggregators (such as PitchBook Data and CB Insights) to fill out the data across multiple vintage years. Our own knowledge and experience in the region also plays an important role in this year’s report. Data is current as of June 30, 2018. Discrepancies in the data between last year’s report and this year’s publication can be attributed to the utilization of a more complete data set for this year’s write-up. BIP CAPITAL 3 STATE OF STARTUPS℠ IN THE SOUTHEAST NOTABLE OBSERVATIONS and emerging trends
The Southeast is very much on par with the “Innovations Hubs” (Boston, New The number of startups and venture capital funds in the region York City and the San Francisco Bay Area) in terms of pre-money valuation continues to increase, reflecting the maturation of the startup relative to the size of a given investment round. ecosystem in the Southeast.
Across the country, $1M buys roughly the same ownership percentage of Funding in the Southeast has grown significantly since 2016, comparable companies. However, the revenue multiples used to determine pre-money valuations are significantly different. The data supports the averaging 20.6% annual growth over the last two common assumption that companies in the Innovation Hubs are raising years (we are currently on pace for $6 billion this year). significantly more capital at earlier stages in the company lifecycle.
Boston, New York City and the San Francisco Bay Area Large venture capital funds from these technology Innovation Hubs are spending more and more time in the Southeast as their interest in the region grows. You can see the presence of these firms in the state-by-state recap in this report.
BIP CAPITAL 4 STATE OF STARTUPS℠ IN THE SOUTHEAST VALUATIONS AND REVENUE MULTIPLES a closer look
We took a closer look in this year’s report at the different types Then, we compared pre-money valuations in the Southeast vs. of deals getting done in each southeastern state, and how that the Innovation Hubs. We were somewhat surprised to learn compares to the established “big three” innovations centers that, in aggregate, the Southeast is very much on par with the of Boston, New York City and the San Francisco Bay Area. We Innovation Hubs in terms of pre-money valuation relative to the anticipated that we would find significant disparities in the pre- round size. If the company is looking to raise $1M, then the pre- money valuation in each of these ranges from region to region money valuation is roughly the same from region to region. and perhaps from state to state. Said another way, if you are looking to invest between $1M and We were wrong. $5M, you will own between 11% and 38% of the company after the We looked at five different deal size categories: round closes, regardless of region. This is shown in more detail in the table below: <$1M $1M - $5M $5M - $10M $10M - $15M >$15M
Southeast # of Deals Southeast Median Pre $ Hubs # of Deals with Hubs Median Pre $ Deal Amounts with Valuation Valuation Valuation Valuation
< $1M 522 $1.7M 2,702 $1.6M $1M to $5M 567 $8.0M 5,057 $8.0M $5M to $10M 201 $19.0M 2,771 $19.0M $10M to $15M 95 $30.6M 1,588 $30.3M >$15M 207 $76.0M 4,583 $100.1M
5 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST VALUATIONS AND REVENUE MULTIPLES continued We acknowledge that the traditional Innovation
However, there is a large disparity in the maturity of the company that is being funded Hubs have decades of experience on how to in the Southeast versus those in the Innovation Hubs. Where available, we compared a grow and scale businesses. However, our read company’s revenue to its pre-money valuation when it was funded. of the market in the Southeast, and particularly in Atlanta, is that this knowledge has now Deals in the Southeast are being priced at an average of 3.8x revenue while been diffused to and learned in the 2nd tier deals in the Innovation Hubs are being priced at 8.8x revenue. innovation hubs. Successful companies are now being built outside of the traditional To put that into context, on average, a company with $1M in revenue is priced at investment centers in a more balanced $3.8M in the Southeast. That same business would be priced at $8.8M in one of the supply/demand environment. Innovation Hubs. VALUATION $8.8 MILLION REVENUE $3.8 MILLION
$1 MILLION $1 MILLION SOUTHEAST INNOVATION HUB That is a meaningful difference.
We observe that investors from the Innovation Hubs are more willing to invest in a The data shows that a $1M category they believe in, even if there is not a clear category leader yet, and will do so investment buys the same before they see meaningful traction (i.e., revenue) from early stage businesses. ownership percentage of a company regardless of region Going back to our earlier statement about valuations being the same, if you look a little deeper, this is only partially true. While the valuation may be the same, the company in or state. However, businesses the Southeast is a more mature company, with more revenue (more than twice as much, based in the Southeast have more in fact). The data indicates that investors in the Southeast use a different approach than revenue at the same valuation. those in the Innovation Hubs.
6 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST VALUATIONS AND REVENUE MULTIPLES Some specific notes regarding median notes & stats pre-money valuation size in the Southeast:
VIRGINIA A couple of notes to consider when interpreting this valuation analysis: Virginia brings in the highest median of deals reported in the valuation at $10M 36% Innovation Hubs are of $5M or greater. In the Southeast, that number is only 15%. We believe that this is driven by capital availability and the need to put that capital to work more so than the actual value of the businesses themselves (i.e., there is an abundance of supply in the Innovation Hubs). Florida comes in second with a Capital availability is also our hypothesis for why the revenue multiples are so vastly median valuation of $9M FLORIDA different from region to region (i.e., in order to put committed investment capital to work, (but closed almost twice as firms have to pay higher valuations). many deals as Virginia)
of deals in the Southeast 57% are less than $1M.
Mississippi closed the least number This corroborates the Southeast’s moniker as a 2nd or 3rd tier innovation hub. With the MISSISSIPPI of deals at 43, but came in the maturation of the startup ecosystem and the increasing availability of capital, larger middle of the pack in dollars at a investments will be made, moving a greater percentage of future deals north of $1M (i.e., reducing the % of smaller sized deals going forward). median of $7M
This analysis is directional, recognizing that small deals often are underreported and that only a small percentage of companies report their revenue when closing an investment round. The median in Alabama is ALABAMA A the smallest with a pre-valuation of $2M
7 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST In this section, we try to assess the causes of the data observations listed above.
Our summary of potential causes follows:
There is a rush to diversify one’s portfolio through the private markets. As the LOOKING IPO window has moved up market, more value is being created in the private markets. In order to access this value creation, people and institutions alike THROUGH are investing through private equity, growth equity and venture capital. This influx of money into the Innovation Hubs has moved valuations up in THE DATA those regions in order to put all of that capital to work. It’s a competitive market where a lot of available capital is chasing a finite number of quality investment opportunities.
Areas outside of the Innovation Hubs have not seen as large an increase in fund size or new capital entrants into the market. Therefore, the valuations of their businesses have not been impacted or inflated as much. UNICORNS in the Southeast
Out of 119 unicorns in the United States¹, the following are based in the Southeast:
$1.4B (NC) $1.6B (FL) $6.4B (FL)
$4.5B (FL) $1.1B (GA) $1.2B (GA)
One unicorn exited last year with the IPO of GreenSky (GA) - $874M
UNICORNS [YÜ-NƏ-KÓRN] : of the unicorns in the US are (any privately owned company that reaches a valuation of $1 billion or greater) 60% 119 B2B
9 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST ¹HTTPS://WWW.CBINSIGHTS.COM/RESEARCH-UNICORN-COMPANIES SEEING AROUND CORNERS predictions
Below is a collection of some of our predictions as well as the emerging trends we will be following in the coming year. Based on the analysis of historical data and interviews with various market participants, we foresee:
TALENT RETENTION INVESTMENT FOCUS With the high cost of living in traditional tech hubs, we expect talent to stay While all investment sectors (industries) should grow as the region grows, we put in the Southeast rather than leave for the East and West Coasts. Perhaps expect the areas of strength for the region (Biotech/Pharma; SaaS; Media) more importantly, we also expect talent to flee those hubs and flock to other to persist. They are currently the most mature markets in the Southeast but innovation centers that offer greater opportunity and better quality of life. there is still plenty of opportunity for growth. This will further develop the southeastern startup ecosystem, keeping promising companies in the region. THE IMPACT OF THE “MEGA FUND” ROLL UP STRATEGY The impact of large funds on 2nd and 3rd tier innovation cities will CAPITAL MIGRATION increase in the coming year. These large funds are identifying a category We believe we’ll continue to see fewer deals being done annually in the for investment and are making large bets early. As competitors arise, the Southeast, but more dollars being invested (Mid-year numbers for 2018 project funds are acquiring these businesses and rolling them into what becomes 1,190 deals, the smallest annual number in the study’s five-year period, but the category leader through a combination of innovation and acquisition. project $6B of capital invested, which would be the highest in that timeframe). Businesses coming out of the Southeast are barely getting out of the gates Companies are staying in the region longer (see “Talent Retention”), which before acquisition interest heats up. Without a large growth round of capital, allows them to attract larger funding rounds as firms based in the Innovation the Southeast’s homegrown companies won’t have a chance to become a Hubs look for returns from companies based outside of their immediate locality. category leader, opting instead to be acquired by these Mega Funds.
INVESTORS Similar to last year, we expect continued investment in the private market from individuals and institutions alike. With so much value being created in the private markets before companies choose to go public, more investors will look to invest in the asset class.
10 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST SEEING AROUND CORNERS investment trends
Artificial Intelligence embedded into Growth of solutions that provide workflows (software that guides the customers with more lifelike digital user vs. user-guided software) experiences through AR/VR technology
The monetization of data created by More companies that track the IoT, ERP, Insurance Claims, Mobile, customer’s journey entering the market etc., through the use of Predictive Analytics to make companies/ The use of technology in the digital age markets more efficient to enable direct local and personalized advertising and the ability to tackle fraud Processing and detection technology in this market that ensures transaction integrity
Software that drives resource efficiency A significant evolution in software that helps individuals manage wealth and health
11 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST OVERVIEW OF THE SOUTHEAST The Southeast’s B2B SaaS market (1,692 deals) captures the most a regional summary interest from investors, with Consumer Products (1,429 deals) and Biotech/Pharma (1,169 deals) categories rounding out the top three.
The number of investments in the Southeast in a single year continues However, even though Biotech/Pharma had significantly less deals to decline since its peak in 2014. However, as we’ve already stated, closed than SaaS, that category received the most money from investors with a total of $4.8B, compared to SaaS’s $4.4B and while 2018 has seen only 595 deals to date compared to 2017’s total of Consumer Products’ $2.6B. 725 at this same point in the year, the dollar amount is greater in 2018. $3B has been invested so far in 2018 compared to $2.5B at the same SaaS $4.4B 1,692 point in 2017, resulting in an average deal size in 2018 of $5M compared to $3M in 2017. BIOTECH / PHARMA $4.8B 1,169
725 $2.5B 2017 CONSUMER $2.6B 1,429
595 $3.0B 2018 Incubators and accelerators remain a crucial driver of the Southeast’s innovation ecosystem (1,703 investments). This volume of deals is Money coming in higher $25B associated with smaller rounds, but is a vital component to seed the doses means that nearly 600 total dollars invested since 2013 market for larger growth rounds. companies have received a total of $3B to date in 2018, which is It is interesting to note that while the 7,909 dominant venture capital investors supporting on track to significantly outpace number of investments 2017’s total investment of just in the Southeast southeastern companies are based within under $5B. the region, of the 45 most active VC firms (five per state, independent of the number of deals per state), nearly one-third of them are coming from the Innovation Hubs. This supports the previous statement that VCs are recognizing the greater value for their money INNOVATION HUBS by investing in the Southeast’s businesses.
BIP CAPITAL 12 STATE OF STARTUPS℠ IN THE SOUTHEAST TOP 3 INDUSTRIES FOR INVESTMENT TOP AREA OF INVESTMENT by state biotech / pharma
SaaS Manufacturing / Media Biotech / Consumer FinTech Cybersecurity Healthcare IT IT Infrastructure Industrial Tech Pharma
# OF INVESTMENTS
SOUTH CAROLINA TOTAL DOLLARS INVESTED ALABAMA
$4.7B $4.9B KENTUCKY $4.5B
$4.2B
$3.7B 1,306 1,593 1,678 MISSISSIPPI 1,388
TENNESSEE 1,349 $3.0B
FLORIDA 595
VIRGINIA
GEORGIA NORTH CAROLINA 2013 2014 2015 2016 2017 2018 (YTD)
13 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST The State of StartupsSM In ANGEL ALABAMA INVESTORS
Total dollars invested since 2013: AIM Group 4 $675 million BlueTree 1 Allied Angels Number of investments Robin Hood since 2013: Ventures 1 255 Auburn Angel 1 Network
Top area of investment (by dollars): Biotech
• Overall, the total number of investments are on track to equal 2017, but the dollars are significantly lagging behind last year. Some very big deals are going to have to close to reach INCUBATOR VENTURE last year’s money number. ACTIVITY CAPITAL FUNDS • Biotech remains Alabama’s hottest market, drawing $25M more dollars than the second biggest sector, Manufacturing/Industrial Tech. Innovation Depot 14 2 Advantage Capital • While Biotech/Pharma’s four deals in 2018 is o its peak of 14 deals in 2016, the deals are bigger—already totaling $11M (vs. $10.6M total in 2016). GIGTANK Ballast Point Ventures • Of the top five VCs investing in Alabama, three are from the 3 2 Silicon Valley and New York Innovation Hubs.
Lists represent investments made into Alabama. Capital Factory 2 2 e.ventures
Y Combinator 1 2 Greycroft Partners
Uncork Capital 14 BIP CAPITAL 2 STATE OF STARTUPS℠ IN THE SOUTHEAST The State of StartupsSM In ANGEL F L ORID A INVESTORS
otal dollars in ested Miami sin e 2013 Angels 26 New World $7.6 billion Angels 21 umber of in estments Tamiami sin e 2013 Angel Funds 12 Florida 2,018 8 Angel Nexus o area of in estment Mark b dollars Cuban 6 Media
• Media companies remain number one in Florida for attracting investors with $2.6B received, $2.3B of which was raised by industry unicorn Magic Leap. • SaaS and Consumer Products continue to attract the most INCUBATOR VENTURE deals in the Sunshine State with 393 and 378, respectively, CAPITAL FUNDS but their investment amounts are in the middle of the pack ACTIVITY ($605M and $984M, respectively). • Additionally, investments in Consumer Products seem to be Tampa Bay Wave Florida Funders significantly slowing down, with only 19 deals worth a total of 30 17 $31M so far in 2018 (compared to 50 deals worth a total of $228M in 2017). Venture Hive Insight Venture Partners • While the number of deals has consistently declined since its 28 16 best year in 2014, Florida companies are receiving significantly more money from investors than ever before. The total invested to date in 2018 is $1.2B, on pace to more 500 Startups venVelo than double the previous year and blow 2014 dollar amounts 23 14 ($1.4B) out of the water. Techstars 18 14 Westlake Ventures
Lists represent investments made into Florida. Healthbox Krillion Ventures 15 BIP CAPITAL 17 12 STATE OF STARTUPS℠ IN THE SOUTHEAST The State of StartupsSM In ANGEL GEORGIA INVESTORS
otal dollars in ested Atlanta sin e 2013 Technology 24 Angels $5.0 billion AIM Group 13 umber of in estments Thomas sin e 2013 Noonan 9 1,242 Ashish 7 Mistry
o area of in estment b dollars SaaS
• Georgia remains the Southeast’s SaaS innovation leader with 358 deals totaling $1.6B over the time period reviewed. While the number of SaaS deals in 2018 remains on par with INCUBATOR VENTURE 2017, dollar amounts per deal have dropped thus far. ACTIVITY CAPITAL FUNDS •The Biotech/Pharma and FinTech categories are tied for second place with $606M and $604M invested, respectively. However, Biotech/Pharma has closed Advanced Technology Development Center BIP Capital 123 deals over the 2013-2018 time period, compared to 48 34 FinTech’s 62 deals, showing a larger check size and perhaps a greater confidence in the financial tech sector.
• Cybersecurity, Healthcare IT and Biotech/Pharma seem to be Flashpoint at Georgia Tech 32 18 Tech Square Ventures quickly dropping o investors’ radar with significantly less deals and dollars invested in 2018 than at this same point in 2017. Georgia Tech VentureLab BLH Venture Partners • Unlike several other states that attract investors from other 26 17 areas, 100% of the top VC firms investing in Georgia-based companies are based in the Peach State. Techstars TechOperators Lists represent investments made into Georgia. 20 16
TechSquare Labs Atlanta Ventures 16 BIP CAPITAL 13 16 STATE OF STARTUPS℠ IN THE SOUTHEAST The State of StartupsSM In ANGEL KENTUCKY INVESTORS
Total dollars invested Northern Kentucky 9 since 2013: Angels Bluegrass $426 million 6 Angels Enterprise Number of investments Angels since 2013: Community 5 Fund Cherub 344 4 Fund Queen City Top area of investment Angels 2 (by dollars): Biotech/Pharma
• Biotech/Pharma in the Bluegrass State has overtaken Consumer Products and SaaS as the most popular category for investors, bringing in 62 deals worth a total INCUBATOR VENTURE of $228M over the five-year time period (more than all the other sectors combined). 2017 in particular was a ACTIVITY CAPITAL FUNDS banner year for this market with nearly $80M invested. • From a dollar perspective, no other category comes UpTech Yearling Management close to Biotech/Pharma. Healthcare IT holds second 24 8 place with a total of $62M received from investors. • Overall, Kentucky continues to see a slowdown in the number of deals being done, but investment dollars are XLerateHealth 16 8 Startups@KSTC staying steady. 2018 looks to be on pace to equal 2017 in dollars. • Kentucky saw two notable exits (ZirMed and Apellis) Velocity Indiana Connetic Ventures since our 2017 report, adding credentials to the state’s 14 7 startup scene. Lists represent investments made into Kentucky. Village Capital 5 7 The Sequel Fund
Kentucky Innovation Network The JumpFund 17 BIP CAPITAL 4 6 STATE OF STARTUPS℠ IN THE SOUTHEAST The State of StartupsSM In ANGEL MISSISSIPPI INVESTORS
otal dollars in ested Mark sin e 2013 Cuban 2 South Mississippi $27 million 1 Angel Network
umber of in estments Richard Branson sin e 2013 1 Richard 43 1 Biedenharn Paul o area of in estment Ma 1 b dollars Consumer Products
• Consumer Products continues as the hottest single sector in Mississippi with 12 deals since 2013 totaling $6M. • B2B SaaS solutions came in a very close second place with INCUBATOR VENTURE seven deals totaling $5M. ACTIVITY CAPITAL FUNDS • 2018 is shaping up to look very good for Mississippi in terms of dollars invested. Deals worth a total of $7M have already closed this year, which is more than the full years of 2016 and Y Combinator 3 4 Advantage Capital 2017 combined (*Note: One investment of $5M into Solay, LLC skews this number). 1 Mississippi Business Incubators Madrone Capital Partners 2 Lists represent investments made into Mississippi.
The Cleantech Open 1 Innovate Mississippi 2
Social Capital 2
ChinaRock Capital Management 18 BIP CAPITAL 2 STATE OF STARTUPS℠ IN THE SOUTHEAST The State of StartupsSM In ANGEL NORTH CAROLINA INVESTORS
Total dollars invested RTP Capital since 2013: Associates 38 Triangle $5.1 billion Angel Partners 12 Number of investments Upstate Carolina since 2013: Angel Network 11 1,382 Piedmont 9 Angel Network Top area of investment Charlotte (by dollars): Angel 8 Fund Biotech/Pharma
• To no one’s surprise, Biotech/Pharma continues to lead the way in North Carolina, attracting almost $2B in investment money over 310 deals since 2013. INCUBATOR VENTURE • The FinTech market remains in second place in the Tar Heel ACTIVITY CAPITAL FUNDS State with 65 deals totaling $829M. • Consumer Products is looking hot in 2018 with 35 deals NC IDEA already closed for a total of $87M. SaaS is also heating up, 62 32 IDEA Fund Partners with 29 deals so far this year, totaling $93M. • Overall, 2018 is looking like it’s going to be a good year for Launch Chapel Hill 39 North Carolina startups, with $723M invested in the first six Hatteras Venture Partners months. This is on track to be the state’s best year yet in 27 terms of dollars invested in innovation. Techstars 17 Lists represent investments made into North Carolina. 17 Cofounders Capital 13 The Startup Factory 14 Battery Ventures 9 First Flight Venture Center
Andreessen Horowitz 19 BIP CAPITAL Queen City Fintech 13 STATE OF STARTUPS℠ IN THE SOUTHEAST 9 The State of StartupsSM In ANGEL SOUTH CAROLINA INVESTORS
otal dollars in ested sin e 2013 Upstate Carolina Angel Network 14 $457 million The Angel Capital Group umber of in estments 3 sin e 2013 Atlanta Technology 2 357 Angels AIM Group o area of in estment 2 b dollars SaaS
• The B2B SaaS solutions sector stands out as the leading sector in the Palmetto State with 62 deals totaling $119M since 2013. INCUBATOR VENTURE • Consumer Products and Biotech/Pharma are neck and neck ACTIVITY CAPITAL FUNDS for second place (taking over from Manufacturing/Industrial Tech) with 66 deals worth $72M and 67 deals worth $79M, respectively. However, both of these segments are looking The Harbor Entrepreneur Center Kleiner Perkins paltry in terms of 2018 investments. 22 6 • 2018 is behind pace relative to 2017 (which was the best year for startup investing since 2014) with $37M invested to date. $12M of this is into one company, Whereable Iron Yard Ventures 14 5 Noro-Moseley Partners Technologies. • 40% of all the deals done in South Carolina over the reviewed time period were for companies based in the Start-Up Chile Capital A Partners Charleston area, dubbed the East Coast’s “Silicon Harbor.” 3 5
Lists represent investments made into South Carolina. Techstars 2 Alerion Ventures 3
IDEA Fund Partners 20 BIP CAPITAL 3 STATE OF STARTUPS℠ IN THE SOUTHEAST The State of StartupsSM In ANGEL TENNESSEE INVESTORS
otal dollars in ested Nashville sin e 2013 Capital 24 Network NueCura $2.1 billion Partners 11 umber of in estments Angel sin e 2013 Capital Group 7 1,025 6 InCrowd Capital o area of in estment AIM b dollars Group 5 Healthcare IT
• Healthcare IT leads the pack in this year’s report for the Volunteer State with 152 deals totaling $437M over the five-year period; $26M in 2018 so far. INCUBATOR VENTURE • B2B SaaS solutions are a close second, earning $433M in ACTIVITY CAPITAL FUNDS investment funds over 209 deals. That includes $26M already secured in 2018. • Biotech/Pharma is heating up too, with $23M secured over Nashville Entrepreneur Center 26 74 Innova Memphis 12 deals so far in 2018. • The investment slowdown since 2014 continues in this state, with 2018 looking to come in on par or even slightly lower Start Co. (VC) Jumpstart Foundry than 2017. 24 32
Lists represent investments made into Tennessee. The Company Lab 23 MB Venture Partners 28
GIGTANK 19 Chattanooga Renaissance Fund 27
TENN Master Accelerator Program Solidus Company 21 BIP CAPITAL 18 27 STATE OF STARTUPS℠ IN THE SOUTHEAST The State of StartupsSM In ANGEL VIRGINIA INVESTORS
Total dollars invested Dingman since 2013: Center Angels 11 Jennifer $3.7 billion O’Daniel 11 Number of investments Charlottesville since 2013: Angel Network 9 1,243 New Dominion 8 Angels Top area of investment 757 (by dollars): Angels 8 SaaS
• The SaaS sector continues to draw by far the greatest amount of attention from investors. Virginia saw 324 deals worth a total of $960M invested in the sector since 2013. INCUBATOR VENTURE • Cybersecurity comes in second place with $549M invested ACTIVITY CAPITAL FUNDS over 109 deals, setting Virginia apart from several other states where this segment didn’t even show up on the radar. • 2017 was a great year for entrepreneurs in Virginia, pulling in MACH37 35 28 Blu Venture Investors more than $903M—the state’s best year for investors in the time period studied. 2018, however, seems to be much slower and will likely come in a few hundred million dollars under that. Lighthouse Labs 24 14 Columbia Capital Lists represent investments made into Virginia. Techstars 11 14 NRV
10 Plug and Play Tech Center New Enterprise Associates 14
Tech.Co Grotech Ventures 22 BIP CAPITAL 8 12 STATE OF STARTUPS℠ IN THE SOUTHEAST GOVERNMENT BACKED INVESTMENTS by state FLORIDA State government funded investing is more prominent in Florida and South Carolina 45 than other states. South Carolina, however, sees one organization, SCRA, investing in Florida Institute for the innovative companies, while Florida enjoys three go-to options. Alabama, Tennessee Commercialization and Virginia have seen a good number of government-specific deals, too. of Public Research 25 UCF Business Incubator 20 UF Innovate
SOUTH CAROLINA 99 SCRA Technology Ventures VIRGINIA ALABAMA TENNESSEE GEORGIA 66 57 67 18 Center for Innovative Alabama Launch Tennessee GRA Venture Fund Technology Gap Launchpad Funds 13 Kentucky, Mississippi and North Carolina i.Lab at UVA have no government backed investment entities that show up in this report.
23 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST NOTABLE EXITS by state
ALABAMA GEORGIA
company buyer year value company buyer year value Shipt Target 2017 $550M SecureWorks IPO 2016 $1.87B GATR Technologies Cubic 2015 $233M AirWatch VMware 2014 $1.55B GreenSky IPO 2018 $874M eVestment NASDAQ 2017 $705M FLORIDA Alliance company buyer year value CardioMEMS St. Jude Medical 2014 $556M Chewy PetSmart 2017 $3.35B Paymetric Vantiv (now WorldPay) 2017 $550M Altor BioScience NantCell 2017 $1.08B Lancope Cisco Systems 2015 $452M Pentaho Hitachi Vantara 2015 $600M Cloud Sherpas Accenture 2015 $410M
AquaVenture Holdings IPO 2016 $457M EndoChoice IPO 2015 $368M Akamai Prolexic Technologies Technologies 2014 $409M Silverpop Systems IBM 2014 $275M Tower Cloud Uniti Group 2016 $230M Cardlytics IPO 2018 $254M
Santen Clearleap IBM 2015 $210M InnFocus Pharmaceutical 2016 $225M
24 BIP CAPITAL STATE OF STARTUPS℠ IN THE SOUTHEAST NOTABLE EXITS continued SOUTH CAROLINA company buyer year value Benefitfocus IPO 2013 $644M KENTUCKY company buyer year value ZirMed Bain Capital 2017 $750M VIRGINIA Apellis IPO 2017 $690M company buyer year value
NORTH CAROLINA Cvent Lanyon 2016 $1.65B
company buyer year value Mandiant FireEye 2013 $1.05B Evolent Health IPO 2015 $973M Cardioxyl Bristol-Myers 2015 Pharmaceuticals Squibb $2.07B Opower IPO 2014 $902M Amicus Scioderm Therapeutics 2015 $847M Eloqua Oracle 2013 $871M Cvent IPO 2013 $812M Bamboo Therapeutics Pfizer 2016 $827M Verrica Appian IPO 2017 $704M IPO 2018 $374M Pharmaceuticals Dova Pharmaceuticals IPO 2017 $425M Chimerix IPO 2013 $342M Privia Health LBO 2014 $400M MaxPoint Interactive IPO 2015 $294M Cofense BlackRock 2018 $400M TradeKing Ally Financial 2016 $294M ChannelAdvisor IPO 2013 $287M
BIP CAPITAL 25 STATE OF STARTUPS℠ IN THE SOUTHEAST Our intent is for this report to further educate investors and entrepreneurs using our more than 10 years of experience in this space. We look forward to producing this eBook for our audience every year.
This report was generated using data from: PitchBook Data CB Insights Interviews with entrepreneurs and investors in the region BIP Capital knowledge and experience
Although believed to be accurate, neither BIP Capital nor any of its members, officers, employees, affiliates or subsidiaries make any warranties regarding the information described herein. Neither the information, nor any opinion expressed or implied in this report, constitutes a solicitation by BIP Capital for the purchase or sale of any securities.